The National Board of Revenue (NBR) is observing developments regarding a recent global move setting the minimum tax rate for big companies at 15 per cent to curb scopes for them to transfer profits to low tax jurisdictions.
A group of 136 countries, representing more than 90 per cent of the global GDP, on October 7 agreed to set a minimum global tax rate and joined a new two-pillar plan to reform international taxation rules.
It will ensure that multinational enterprises pay a fair share of tax wherever they operate, said the Organisation for Economic Co-operation and Development (OECD), which leads the talks.
Out of the 140 countries involved, 136 supported the deal while Kenya, Nigeria, Pakistan and Sri Lanka are abstaining for now, reports Reuters.
Contacted, the NBR officials who follow international tax issues said Bangladesh allows tax exemptions for various industrial sectors, namely power, garments and ICT, to encourage local and foreign investments.
Hence, it is yet to decide on any minimum corporate tax, they said.
Taxmen said they earlier attended meetings related to the OECD’s base erosion and profit shifting (BEPS) project taken in 2013, which later turned into the OECD/G20 Inclusive Framework on BEPS.
Now 140 countries implement the Inclusive Framework on BEPS. Bangladesh is yet to join.
“We will follow developments and then we will decide,” said an NBR official dealing with tax.
Reuters reported that negotiations have been going on for four years.
While the costs of the pandemic gave them additional impetus in recent months, a deal was only agreed when Ireland, Estonia and Hungary dropped their opposition and signed up, it said.
Moreover, the 15 per cent floor agreed is well below a corporate tax rate which averages around 23.5 per cent in industrialised countries, added Reuters.
Financial Transparency Coalition said developing countries would be the main losers of the OECD minimum global tax deal, risking undermining Covid-19 vaccination and recovery effort.
It will benefit developed countries, particularly the US, a key player behind this agreement, it added.
Towfiqul Islam Khan, senior research fellow of the Centre for Policy Dialogue, said the deal was likely to raise tax rates in low tax jurisdictions, which was welcome.
“However, not all industries are included under the deal. The deal will mainly benefit the large OECD economies,” he said.
“It is likely that the generated revenue will mainly be distributed to the headquarter countries and countries in global south may not be adequately benefitted,” he added.
The deal overlooks concerns highlighted by G-24 countries including India, Pakistan and Sri Lanka regarding reallocation of profits.
The over-representation of low tax jurisdictions in the OECD process is indicative of the deeply unambitious threshold of 15 per cent to tackle tax abuse, said Khan.
“If this deal could be negotiated under the United Nations, a better outcome for developing countries may have been possible. It is critical that global tax matters are negotiated under a UN system where all countries can have an equal say,” he said.
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